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How ResMed Inc (ASX:RMD) just delivered more strong profit growth

ResMed Inc (ASX: RMD) reported its financial results for the fourth quarter and fiscal year 2018 today with the medical device maker achieving strong top-line growth yet again.

Revenue for the year was up 13% to US$2.3 billion, income from operations was up 27% to US$542 million and the company declared a quarterly cash dividend of US$0.37 per share.

The company also refined its calculations of the impact of the US tax reform. As a result, it recognised an additional income tax expense of $5.8 million during the three months ended June 30, 2018 for a total income tax expense of $138 million during the year ended June 30, 2018.

What did management have to say?

Management emphasised its continued focus on its cloud-based SaaS business and remain optimistic about the size of the market.

Mick Farrell, ResMed’s CEO said, “We continue to advance our cloud-connected medical device strategy and are growing our cloud-based software-as-a-service business. Our clinical studies and research efforts are being recognized and the opportunity to increase awareness of sleep-related breathing disorders and improve patient quality of life is bigger than ever.”

Looking ahead

Going forward, investors will be keen to see growth in revenue from Brightree, the medical software-as-a-service company that ResMed acquired. Brightree revenue in Q4 2018 was $40 million, an increase of 12% compared to the same period last year.

Gross margins will also be an area of focus with Brett Sandercock, ResMed’s CFO saying he expects next year’s gross margins to be broadly consistent with FY 2018. Margins have hovered around 58% in both 2017 and 2018.

Despite being down by 0.5% today at the time of writing, ResMed shares have been a top performer on the ASX with its shares up 32% so far in 2018.

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Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can find Kevin on Twitter @KevinGandiya.

The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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